Pass-through businesses are defined as sole proprietorships, partnerships or other firms whose owners are allowed to “pass” the businesses’ income through the individual income tax system. Such companies represent more than 50 percent of states’ private-sector workers, according to the Tax Foundation.

These rates represented the combined state and federal burden on pass-through companies, according to the analysis. Most of the amount these businesses pay is set by the federal government’s rules, but they also pay state taxes on individual income, which are highest in California and lowest in those states that don’t levy taxes on individual incomes.

The states without individual income taxes are Alaska, Florida, South Dakota, Texas, Washington and Wyoming.

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Marginal Tax Rates for Pass-Through Businesses

Rank

State

Marginal Tax Rates for Pass-Through Businesses

1

California

46.1%

2

Hawaii

43.7%

3

New Jersey

43.5%

4

New York

43.4%

5

Oregon

42.7%

6 (tie)

Maryland

41.5%

6 (tie)

Vermont

41.5%

8

Minnesota

40.6%

9

Wisconsin

40.4%

10

Maine

39.9%

11

Connecticut

39.7%

12 (tie)

Arkansas

39.6%

12 (tie)

Montana

39.6%

12 (tie)

Nebraska

39.6%

15

Delaware

39.4%

16

Ohio

39.3%

17 (tie)

Illinois

39.2%

17 (tie)

Kentucky

39.2%

17 (tie)

West Virginia

39.2%

20

Rhode Island

38.7%

21 (tie)

Georgia

38.5%

21 (tie)

Virginia

38.5%

23

Kansas

38.4%

24 (tie)

Idaho

38.3%

24 (tie)

Missouri

38.3%

26

Iowa

38.1%

27

North Carolina

38.0%

28

Massachusetts

37.8%

29 (tie)

Mississippi

37.7%

29 (tie)

New Hampshire

37.7%

29 (tie)

Oklahoma

37.7%

29 (tie)

Utah

37.7%

33

New Mexico

37.6%

34 (tie)

Arizona

37.3%

34 (tie)

Michigan

37.3%

34 (tie)

Pennsylvania

37.3%

37

Indiana

37.2%

38

Louisiana

36.5%

39

Colorado

36.4%

40

Alabama

36.0%

41

South Carolina

35.7%

42

North Dakota

35.0%

43

Tennessee

34.7%

44

Nevada

34.2%

45 (tie)

Alaska

32.7%

45 (tie)

Florida

32.7%

45 (tie)

South Dakota

32.7%

45 (tie)

Texas

32.7%

45 (tie)

Washington

32.7%

45 (tie)

Wyoming

32.7%

Source: Tax Foundation

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